Thursday, August 17, 2017

So, why is the Fed doing what it is doing? That question, rarely asked by the financial press, has been asked recently by other Fed board members.

The Fed is supposed to move rates higher when inflation poses a serious threat. So, why has the Fed, since December of 2015, been artificially raising overnight lending rates? Inflation is not a serious threat and has not been during this period. So, what is behind this policy? The answer: who knows?

Other rates have generally not risen in sympathy with the Fed's boost of overnight lending rates. The ten year is about where it was when the December 2015 exercise began. The markets have been unimpressed and largely unaffected by Fed action.

Now Yellen says its time for another rate increase, though "measured" inflation is trending down. If inflation is trending down and is below Fed targets, why the hurry to raise rates? This is a question that Yellen cannot answer. There is no answer to this question.

Why the sudden interest in reducing the Fed balance sheet? There was never a reason to balloon the Fed balance sheet in the first place. Why reduce it now? What data supports this? The answer: no data shows any change sufficient to warrant a change in policy.

What this all means is that Fed policy is completely adrift and unrelated to any actual economic data. The economy is picking up and inflation is declining. Hardly a call for Fed action.

The only conceivable explanation is politics. There is no economic explanation for Fed policy. There is nothing in the data or in forecasts that calls for any particular Fed action. But, politics provides an answer.

It is embarrassing to Janet Yellen and other left wing academics that the economy is picking up just as the new Administration is celebrating its first six months in office. Maybe by jacking up rates and selling off the Fed balance sheet, the economy can be ground to a halt. Maybe, that is what is behind Yellen's thought process.

There is certainly no data and no argument to support further rate increases or the timing for reducing the Fed balance sheet. This is just politics.

Monday, August 14, 2017

The most recent quarter showed 4 percent economic growth in Japan. Economists, as a group, had predicted 2.5 percent growth as recently as last week -- about a 60 percent miss. Not unusual.

What is important here is that no one thinks Japan can grow any more. Japan, as is well known, has a shrinking and dramatically aging population. So, economists have dismissed Japan and argued that an aging shrinking population means no growth. Wrong.

Capitalism can produce economic growth regardless of demographics. Free markets can do most anything if given a chance.

Japan is now growing faster than Europe, faster than Britain, faster than the US. The pundits need to go back to the drawing boards. Much faster growth is possible in Japan, Europe and, yes, in the United States.

Thursday, August 10, 2017

Today's Washington Post headline: "New York Times guilty of large screw-up on climate-change story."

In earlier blog, I commented on the completely political nature of this NY Times article. As it turns out the facts are even worse than I thought. The article is a complete and total fabrication, as noted by this morning's Washington Post.

Here is the main lie in the NY Times article:

“The draft report by scientists from 13 federal agencies, which has not
yet been made public, concludes that Americans are feeling the effects
of climate change right now," said the NY Times article.

This is completely and utterly false. The report had been available since January of this year, as was well known at the time this false article was written. The report had been uploaded by the nonprofit Internet Archive in January and publicized by the NY Times itself in August.

These reporters probably knew that the report had long been public when they wrote the article and that NY Times' editors knew that it was a pack of lies as well. If they did not know this they are simply incompetent. But, far more likely is that the reporters and editors knew that they were lying and that the story was false at the time they wrote the article and at the time it was published.

Here is more of what the article said: “Scientists say they fear that the Trump administration could change or suppress the report.” Really? How could the Trump Administration suppress or change a report that had been public for eight months? The Times did not address that, of course.

Here's another doozy lie in the NYTimes article: “Another scientist involved in the process, who spoke to The New York
Times on the condition of anonymity, said he and others were concerned
that it would be suppressed.” Really? So this unnamed, anonymous scientist believed that a report that had been public for eight months was going to be "suppressed." How stupid is that?

This article by the NY Times was a complete and total fabrication -- the epitome of fake news. Nothing in this article was true, accurate or researched....nothing. The writers and the editors knew that it was completely false. And, it ran on the front page.

This is pretty typical of the NYTimes, as I have noted, over and over again in this blog. The NYTimes is a hack, political rag with no regard for the truth. Even the Washington Post has pointed this out now in today's edition.

In their rush to discredit the Trump Administration, the NY Times simply invents facts or publishes false facts knowingly. The NY Times has no regard for the truth and the majority of their articles on the front page related to politics or economics are simply outright and deliberate fabrications designed to advance a political agenda.

Wednesday, August 9, 2017

The NYTimes has two more ridiculous articles in their business section this morning that have no purpose other than to attack the Trump Administration because the Trump folks have the effrontery to do things the right way, not the NYTimes way.

One article entitled "Secrecy and Suspicion Surround Trump's Deregulation Teams," written by Danielle Ivory and Robert Faturechi. This absurd article makes the point that people who are working to help deregulate industry are people who once worked in the industry. Wow! Isn't that a remarkable fact. Is this article intended as joke. Should people who know nothing about the industry be in charge -- as was typically the case in the Obama Administration.

The other, equally ridiculous, article is really a graphic entitled "The Business Links of Those Leading Trump's Rollbacks." This nonsense was brought to us by Danielle Ivory, Robert Faturechi and Karl Russell. The point here was the same as the article in the previous paragraph -- knowledgeable folks are leading the effort to deregulate. That, apparently, is not the right way to go, according to the NY Times. Again, I suppose the Times prefers folks who know absolutelly nothing about the industry they are supposed to be regulating, a pattern so ably followed by the Obama Administration.

The NYTimes is either a jokebook or a Democratic Party daily handbook. It is getting increasingly harder to figure out which.

Tuesday, August 8, 2017

Today's NYTimes has another incendiary headline: "Scientists Fear Trump Will Dismiss Climate Change Report." What scientist is quoted in the article? A political scientists.

"One government scientist who worked on the report, Katharine Hayhoe,
a professor of political science at Texas Tech University, called the
conclusions among “the most comprehensive climate science reports” to be
published."

No other "scientist" was quoted.

I wonder how a political science professor becomes a "scientist" with expertise on climate change? Three guesses and the first two don't count.

One more example of NYTimes politicalization of the news.

Who frankly cares what a political scientist thinks about climate change?

Thursday, August 3, 2017

Capitalism is still alive and kicking in the United States, though it occupies a shrinking part of the American economy. It is mostly in the technology sector that capitalism thrives in the US. The left has put state control in most of the rest of the American economy, which is why you see economic stagnation in large parts of the economy. But, Uber, Airbnb, Tesla, Amazon all represent the ways in which technology is making Americans lives better. No doubt the left will try to snuff these out as well in their drive toward socialism.

You would think that the example of Venezuela -- the latest in a long string of socialist experiments -- would cool the ardor of the left for state control of the economy. But, it hasn't.

Capitalism will always find a way unless brute military compulsion takes over, such as we observed in the old Soviet Union and modern Venezuela. As long as the government doesn't develop a policy of outright dictatorship and terror on its population, capitalism will find a way.

While the American economy has been severely hamstrung by the left, nevertheless capitalism is overcoming barriers by going where they aren't. Our schools have been destroyed by the left and our health care system is now headed that way.

But, there is hope, so long as the government leaves any space of breathing room for innovation and freedom. We shall see if that happens. But, for now, innovation continues at a breathtaking pace in the few areas of the economy that the left hasn't strangled.

Wednesday, August 2, 2017

Life used to be pretty simple. Folks paid rent or mortgage payments, consumed food and energy, and paid their taxes. Measuring inflation was relatively simple. One simply checked on average rents (or mortgage interest rates, food prices and energy prices. Tracking these simple numbers gave a straight-forward estimate of the cost of living. That was then, but no longer.

Today, 95 percent of Americans have cell phones and almost 80 percent have a desktop computer or a laptop. The government's calculation of the cost of living ignores these items, yet they have become an increasing portion of every household's budget. Are these new technology-based products exhibiting price increases?

What about the cost of transportation? Do taxi fares tell the story? What about Uber? Sometimes, only an Uber driver can be found -- no taxis anywhere in sight? The cost of a taxi at such times is infinite. Uber might be expensive in such situations, but less expensive than the non-existent taxi. How about lodging? How does Airbnb factor into lodging expenses. Is their price inflation here?

Remember that the quality of the product is supposed to be held constant when estimating inflation. Is today's cellphone or laptop of the same quality as what was available ten years ago? What does using Uber and Airbnb cost? How do such costs compare to ten years ago? (No way to know).

What about Amazon's Alexa and Echo? How does the CPI account for these new products and services?

It is not at all clear that current measures of inflation have anything much to do with the theoretical notion of inflation. The concept of inflation is based upon the idea that the currency changes its value. Inflation is the falling value of a currency. The rate at which a currency loses value is the definition of inflation. "Loses value" against what? Aye, that is the rub.

What households consume has changed dramatically in the last several decades and households are much, much more diverse in their spending patterns -- drug use (that something is illegal to consume is irrelevant), technology products, new entertainment devices (think Netflix) were not part of the mix just three decades ago. But, now they are.

So far, economists have ignored these complications. But macroeconomic policy crucially depends upon the measurement of inflation and expectations of inflation. It is no longer clear that we have any idea how to do that. That is part of the reason that monetary policy is more "witchcraft" today than anything based upon scientific considerations.

Sunday, July 30, 2017

Well, well. The second quarter GDP growth estimate is 2.6% (that's an annualized number), well above the pundits' expectations.

It is possible that this is simply a statistical aberration and that nothing is going on. But, what if?

Recall that the Obama years were stuck at the < 2 percent average for his entire presidency. Trump is already doing better?

Why was growth so slow during the Obama years? Was it Obamacare? Was it high taxes? Maybe. But a far more likely explanation is the extreme anti-business rhetoric from the Obama White House and the massive new regulatory environment strangling business formation and expansion.

The real engine of economic growth and employment comes from start-up and small businesses. The Obama years sapped the vitality from that engine by overburdening regulations. Rich folks and bureaucrats welcomed the regulatory overkill. After all, it was all a big plus for them. The rich no longer feared competition from other folks trying to get rich and the bureaucrats were in hog heaven, finding new regulations to promulgate daily. Life was grand.

But, the regulatory regime doesn't hit everyone the same. The rich and powerful love new regulations, regardless of their source. Elitists like Elizabeth Warren and Bernie Sanders have never heard of a regulation that they couldn't get behind -- no matter the impact on average Americans.

But for average folks (those not rich or sitting in protected bureaucratic or academic jobs), the Obama years were an unending nightmare. Rising health care costs and rising deductibles forced many Americans to forego health care entirely thanks to Obamacare. For others the higher premiums forced some tough family decisions. (Bureaucrats have their health care paid and are unconcerned about higher health care costs -- not their problem).

Meanwhile regulations dampened economic activity and job growth leading to huge numbers of Americans choosing to give up looking for work. The only records set during the Obama years were: 1) Massive increases in student loan debt; 2) Massive increases in food stamps; 3) Health insurance costs; 4) National debt. Any measure of well being for average Americans showed lost ground during the Obama years.

But now the Trump Administration, for all of its woes, is waging war on the regulatory state. This is all for the good and should dramatically open up free markets and economic growth.

According to the NY Times, Spain is on the mend. But, the facts, even those in the article say otherwise:

"The unemployment rate remains above 18 percent and is near 39 percent
for younger workers. Some 4.25 million people in a nation of 47 million
are officially looking for work. Even in areas of growth, fraught labor
negotiations and frequent strikes attest to the insecurity of work and
the pain of diminished wages."

How's that for a strong recovery! It works for rich folks and bureaucrats, but for everybody else, those are depression statistics -- not statistics that show an economic recovery.

Wednesday, July 19, 2017

The collapse of the Republican effort to replace Obamacare leaves only one road ahead -- single payer health care. That will put nearly 70 percent of the American economy under the thumb of various levels of government. America is becoming Europe.

The price for this will be paid by the poor and lower middle income folks. Warren Buffett and his pals will continue to have the best health care, because they won't be in the single payer system. Left wingers who claim to believe in public schools, but send their children to private schools, will also use the private health care system, not the single payer system. But the majority of Americans will be forced to suffer the indignities of a single payer system that decides, arbitrarily, who lives and who dies.

The public is being treated daily to what happens in the UK health care system, where the bureaucrats are planning to put to death a small child over the wishes of that child's parents. The arguments that these bureaucrats are using could be used to put anyone to death. Life and death decisions become the purview of the elite bureaucrats, running rough shod over what families may desire. No citizen, not in the top echelons of wealth, will be safe from this "death squad" approach to health care.

It is worth noting that in the UK case, had the parents been Warren Buffett, there would be no decision to be made by bureaucrats because the baby would have been in a private hospital, where bureaucrats cannot arbitrarily put people to death. So, wealthy liberals need have no fear. They will not be subject to the laws that they impose on others. Their children will survive, while the children of the poor can, depending upon the whims of the bureaucracy, be put to death under a single payer system.

These past few weeks represented the last real hope of stopping socialized medicine from becoming a reality for the US. Now, it is hard to see much hope for free market health care. Ironically, it was mainly Republicans who closed the door on reform. Not for the first time.

Friday, July 14, 2017

Pretty amazing. Obama and his administration rolled over for Vladimir Putin -- twice. Obama permitted Putin a free hand in the Ukraine and refused to lift a finger to help the Ukrainians. Then, as if he hadn't made his point, he invited Putin into Syria, effectively leaving that part of the Middle East in Russian (and Iranian) hands.

So, now the Democrats argue that Putin favors Republicans? If so, they are the dumbest folks on the planet.

Mark Warner and Tim Kaine can no longer discuss any real political issues, so away they go on the nonsense about Russia.

These political hacks (Warner and Kaine) are pretending that Russia represents a real threat to the US. That is ridiculous and they know it. Iran and North Korea represent real threats (and perhaps the Chinese), but not Russia. Russia threatens Europe, not us, and Europe, especially Merkel, treats Putin as if they are best friends.

Trump is the only person on the planet standing up to Putin (and Iran and North Korea). The Democrats are wasting their time on a completely implausible story line. Why? Because their economic program is bankrupt and they know it and they have nothing else to talk about.

Sunday, July 9, 2017

The right way to allocate health care expenditures is the same way that any scarce resource should be allocated. Let the free market do the allocation. The result will be better products, lower prices and better patient-doctor relationships.

The wrong way is to have the government do it, either through a bureacratic nightmare of insurance regulations or through a single payer system. The result will be a dramatic worsening in health care quality, availability and the elimination of any patient-doctor relationship. We've already observed this in today's health care system. The pressures of costs will ensure that compensation for medical personnel will fall and, as a result, people who might consider trash pick-up for a career will become, instead, America's care givers.

The free market can't deal with "pre-existing" conditions It is simply not possible. Thus, if you wish to deal with "pre-existing" conditions you need a separate welfare program designed strictly for pre-existing conditions. It won't be first class. No government program ever is. But that's the price you should pay if you fail to insure yourself until you have "pre-existing conditions." That leaves medicaid for those who truly cannot afford insurance and/or health care.

Dealing with "pre-existing conditions" and providing care for the indigent is actually a relatively small problem. The difficulties in the current morass have to do with trying to extend regulations into the great middle class. That won't work. That will simply destroy health care access and quality for middle class Americans and will increase health care costs dramatically. The result: an incompetent, corrupt, and inefficient health care system.

Insurance companies should be free to sell whatever insurance policies they wish to sell and consumers should be free to buy whatever insurance policies they want to buy. Period. So long as there is no fraud in representation, the free market should be allowed to work unhindered without government bureaucratic interference. Ditto for health care. Absent fraud, doctors and hospitals should be free to offer whatever products they wish at whatever prices they choose.

Hospitals should not be required to take in patients who can't pay. If it is desired to provide care for those who can't pay, then state-funded hospitals should be built to provide care for patients who cannot afford free market hospitals.

If the steps described herein are taken, health care will be top quality, available to all and relatively inexpensive -- much cheaper than what we observe today. Going the other way means incredibly poor health care, poor access for middle class and lower income Americans, the elimination of any patient-doctor relationship, and outright denial of health care services for many services that would be routinely provided in a free market health care system.

Saturday, July 8, 2017

"The West became great not because of paperwork and regulations but
because people were allowed to chase their dreams and pursue their
destinies.”

In that single phrase, President Trump, speaking in Poland, addressed the real issue that separates the right and left so bitterly in America and throughout Europe.

The left wishes to decide for others how they everyone should lead their lives; the right wishes to leave it up to the individual to direct their own existence and everything that goes with it.

The left thinks it know all of the answers -- hence paperwork and regulations are their mantra. The right would like to be left alone to make their own mistakes if they so choose. Why not? It's their life.

Making a mistake is not nearly so dreadful as not having the right to make that mistake.

Thursday, July 6, 2017

The NY Times cannot let a single day go by without publishing something that is either an outright falsehood or something that appears deliberately designed to mislead the reader for partisan political purposes. It is not uncommon for multiple "political" articles of this type to appear on a daily basis in the NY Times. The Times appears to have completely lost its role of being a "news" organization.

The Times is now little more than a political organ devoted to promoting the interests of the far left and constantly lauding other countries critical of the United States, its history and its culture. The treatment, for example, of the facts about the medical systems in other parts of the world is invariably based upon fabrication and misleading information. In a rush to promote a single payer medical system for the US, there is little the NY Times would not do to distort the record and mislead the public. The Times is a paper with a mission. Reporting the news is no longer part of that mission.

One (but only one) of today's misleading articles is the one by Nelson Schwartz entitled "Hopes of 'Trump Bump' for US Economy Shrink as Growth Forecasts Fade." Here we are in early July and Schwartz is blasting the Trump Administration because economic growth is not above 4 percent. Schwartz is a little premature since no second quarter numbers are even available. But, he can't wait to throw darts at the Trump Adminstration -- facts or no facts. The Times must make its political point regardless.

What are the facts. First, Trump was not the President in the first three weeks of January, so is the economic record of those three weeks his responsibility? Yes, according to the NY Times in a tortured piece of nonsense. Second, even the first quarter numbers were not likely influenced by an Administration that had been in place a few weeks with few if any of its programs in place.

Not to be deterred, the Times is quick out of the gate to decry the slow economic growth of the Trump Administration, Of course, the Obama record was nothing but slow economic growth. Schwartz never criticized the Obama Administration a single time for their abysmal economic record. Quite the reverse. The NY Times always and consistently praised the Obama record which, in fact, produced the slowest economic recovery in American history. That is a fact. What the Times reports and says is fiction at best and more likely consistent deliberate distortion.

Wednesday, July 5, 2017

An article in the NY Times by Natasha Singer (dated curiously as June 27, 2017) pushes the thesis that Americans should not educate their children if that education provides benefits to the business community. This article is a clear expression of the anti-capitalistic ethic and anti-American ethic of the NY Times and its writers.

The main thrust of this article is that Silicon Valley has been providing significant funding to American public schools to promote the development of "coding" skills. That, apparently, borders on the criminal, according to Ms. Singer, since Silicon Valley itself might benefit if more Americans had coding skills.

Ms. Singer, I suspect, probably doesn't approve of teaching Americans to read or write either, since, heaven forbid, American companies might derive some benefit from an educated populace. Better to keep people ignorant and lacking in skills, so goes Ms. Singer's thesis, so that no business can derive any benefits from hiring Americans.

Ms. Singer would then, one supposes, argue that we need to bring in millions of new immigrants, legal or otherwise, from countries that despise Americans and let them do the coding and fill the jobs that we wish to deny young Americans. That solves both of Ms. Singer's and the left's main agenda -- eliminating jobs for Americans and bringing massive number of immigrants to America who despise our customs, history and can't speak our language.

The NY Times definitely has an agenda and this article makes it loud and clear.

Saturday, July 1, 2017

More government shutdowns loom in states that have made a practice of confiscating middle class income and are mired in waste and corruption. Connecticut, New Jersey and Maine will join Illinois within the next two months as "failed states." Watch out! New York and California are not far behind.

Friday, June 30, 2017

What is the endgame of the left's big government program? The ingredients are all in place: more rules, more regulations, demonizing the rich, physical intimidation of opponents, eliminating free speech, claiming to speak for the poor -- these are all things that we have heard in Greece, in Venezuela, and in Illinois.

Using tactics like this, the left has thoroughly implemented their economic and political programs in Greece, Venezuela and Illlinois. How are things going now? How are the poor doing? How is anyone doing?

In Greece, garbage piled up in Athens threatens the health of all, but especially the poor. There are no longer any real public services in Athens. In Venezuela, people fight daily in the streets for food to feed their children. Civil war has effectively broken out in Venezuela. Illinois, currently at an earlier stage of disaster, no longer pays routine bills to hospitals and schools. Soon, these facilities will close. Already the murder rate in Chicago rivals third world statistics. Violence in Chicago is common place among the poor.

So, how is the Sanders-Warren-Obama-Chavez-Papandreou program working out?

When free people are put in straightjackets, free speech suppressed routinely on college campuses, political language used to incite fierce anger against the business community, the end result is always and inevitably the same.

If you want a glimpse of America's future under the left, visit Athens or Maracaibo today.

Wednesday, June 28, 2017

Check out Eduardo Porter's article on US health care in today's NY Times. It is completely misleading and, no doubt, designed to deliberately mislead it's readers. This is becoming commonplace in the NY Times.

The article is about health care in the United States and compares US outcomes to those in other countries. For example, obesity is one of the "health care" problems.

Porter writes as if "obesity" is some kind of medical problem that can only be dealt with by constant trips to the doctor and to the hospital. Apparently, Professor Porter thinks obesity just happens. It's something that individual habits have nothing to do with. If one person is not overweight and is healthy, but another is not, the reason, suggested by Porter, is that the first person has a doctor or a hospital nearby, while the other does not.

Exactly what the finest doctors and hospitals can do to prevent "obesity" is not clear, but Porter's analysis suggests that lack of doctors and hospitals is the main cause of obesity. Is there anyone out there that believes that?

As is well known in the health care field, the availability of doctors and hospitals is not the most important determinant of health outcomes. Personal habits, diet and so forth are far, far more important than availability of medical facilities. That is well known, but, apparently, Professor Porter has no knowledge of this. Makes you wonder why the NY Times picked him to write about a subject of which the most important facts are unknown to him.

I think we all know the reason for Professor Porter's duplicity and for that of the NY Times. In the rush to expand government's control over everyone's daily life, the NY Times will say or do anything, irrespective of truth or relevance.

Currently, the state of Illinois has $ 14.6 billion in unpaid bills. That's right. You read it right! Illinois is currently not paying its bills and the shortfall is staggering. The state is grinding to a halt.

Soon to be followed by other states: New Jersey, California, and, yes, New York. This outcome is not a "likely" outcome, it is an "inevitable" outcome. It is just a matter of simple arithmetic.

Massive wealth transfers and an increasing non-competitive regulatory environment lead to economic stagnation and financial collapse. Greece and, down a short road, Spain, Italy and France are on that road. But, the US is a player in the game as well. Detroit was the opening bell. Now comes the state of Illinois (and the city of Chicago).

None of this should be a surprise. It's been in the numbers and predicted by rational observers for decades. At the national level, social security and medicare are on the same road. These programs have no hope -- none -- of providing today's young workers anything at all. Yet, Democratic politicians are still singing the praises of these soon-to-be-bankrupt programs. You can't make this stuff up. This is the real world.

Promises unpaid for. That's the game. Detroit, now Illinois, are the inevitable outcome.

Tuesday, June 20, 2017

If you are watching the extra-curricular sideshows taking place on college campuses these days, you already know that it's not your grandfather's (or grandmother's) college campus.

Shouting down speakers you disagree with and kangaroo courts designed to punish those who you suspect of bad behavior or whose political views you don't share is becoming common everywhere in academe.

So, what about free tuition? The argument for this is normally phrased as a discussion about education. But, is that what is really going on at America's colleges and universities? Or is the modern campus life more about political indoctrination and less about education in the sense of math, literature, history, foreign languages, chemistry, physics, engineering and so forth.

What to make of all the new majors that are essentially "identity" education? Since most academics know nothing about these topics, all kinds of new academics have been minted to fill the faculty slots that these new majors have created. If you have been following this evolution, you know that the vast majority of the newly minted academics are essentially political creatures with a predominantly left-wing agenda. Not much real research, in the classic sense of that term, is going on in the new world of "identity" education.

So, free tuition is likely to mainly fund a whole new group of political activists and do little or nothing to promote the kind of educational advancement that has traditionally been provided in Amerca's colleges and universities. For those on the far left, this is great! Indeed, this is the plan.

The wonder is that wealthy folks continue to pour fantastic sums into these hotbeds of single mindedness in the bizarre view that they are furthering education. All of the money pouring into these places is simply funding the revolution. Virtually none of this money goes to education of the type that flourished a generation ago. It's all new-age "identity" education. Turn on your TV and you will see it in action on a regular basis, as folks whose views don't fit the new "identity" world are shouted down, beaten and driven from the campus.

Saturday, June 17, 2017

The Fed moved up the overnight repo rate another 25 basis points by continuing to be the borrower of last resort. By putting an arbitrary minimum on repos done on their own account they force a minimum onto the market. Big deal. No other rates, other than overnight rates, budged. So much for the Fed raising rates.

The massive excess reserve position of the US commercial banking system precludes any real tightening policy as over $ 3 trillion of bond sales would be required to accomplish that.

Not going to happen.

Instead, we just have more conversation from the Fed and the Fed watchers. Much ado about nothing.

Friday, June 16, 2017

The left now proposes that anyone who does not have at least an $ 18 skill set (remember that social security payments are mandatory for all employees) can no longer work in their state and/or the USA. At least twenty percent of the American population fails that test and therefore are legally prohibited from working in any profit-seeking business. Thus, the poorest among us are told that if you seek to improve your skill levels by learning on the job, you are a criminal. That's what the $ 15 minimum wage law says and does.

Of course, the left thinks companies that seek profits are evil. But, unfortunately for that narrative, not everyone can live off their parents and/or the taxpayer. At the end of the day, someone has to support all of this and that someone is the profit-seeking part of the economy. The government and Mom and Dad can only do so much.

Criminalizing the effort to improve one's life chances is the main program of the left. Letting people freely accept pay in the form of work training as opposed to cash is against the law already. The left simply wants to make such laws more punitive by prohibiting an increasingly large part of the poorest Americans from having any real hope of improving their financial position.

The Washington Post and the NY Times now make it an everyday practice to simply invent news. The news they invent feeds their ongoing narrative. The truth, to the Post and the Times, is irrelevant. They have an agenda and they want to fit the stories to that agenda. If the facts in the story are completely false, the Post and the Times don't care. As long as it feeds the narrative, anything goes.

So, you wonder why people don't trust the media anymore. Why should they? Lies begin in the Washington Post and/or the NYTimes, are repeated by the main-stream media and then blared out all day long on CNN and MSNBC. When, as is almost inevitably the case, the truth comes out and the lies are exposed (See the Feb 14th NY Times article about supposed collusion between the Trump team and the Russians as a poster-child example of the lies masquerading as a news story), there is never a retraction or an apology. Instead, WAPO simply moves on to the next lie and the cycle repeats itself.

The same practice occurs in the reporting of economic and financial news. The truth is no longer what matters to the media. If you want to make your case against something, just invent facts that can fit that case and publish those false facts so that you can make your case.

Truth and integrity are no longer relevant to a media that simply wants to pursue an agenda. This media has no interest in facts or truth. They have an agenda and that is all they care about. Who are we talking about: ABC, CBS, NBC, MSNBC, CNN, the NYTimes, Washington Post and the Financial Times. Truth is largely irrelevant to this group.

Saturday, June 10, 2017

This story was written by Michael Schmidt, Mark Mazzetti and Matt Apuzzo.

Here's the first line of the story:

"Phone records and intercepted calls show that members of Donald J. Trump's 2016 presidential campaign and other Trump associates had repeated contacts with senior Russian intelligence officials in the year before the election, according to four current and former American officials."

The headline and the quote are deliberate lies by the authors and the NY Times.

Here's what James Comey had to say under oath this week about the NY Times fabricated story:

"In the main, it was not true. The challenge and I'm not picking on reporters, about writing stories about classified information is the people talking about it often don't really know what's going on and those of us who actually know what's going on are not talking about it."

In other words, the story was a complete (and, no doubt, deliberate) fabrication designed solely to damage the United States in the eyes of its citizens and in the eyes of the world.

The NY Times has yet to apologize for the story. No doubt they are proud of it, because the pack of lies they ran on February 14th led to the appointment of a special counsel and fueled an enormous firestorm led by a dishonest and corrupt media. All based upon deliberate lies by a formerly-respected news organization.

Theresa May, the British PM, lost her majority in Parliament this past week in a stunning upset. The Conservative Party, of which she is the leader, fell 10 seats short of a majority, forcing May to cut a deal with some other smaller party in order to form a new government.

May deserved to lose.

May spent much of her political career explaining that she didn't really believe in free markets and could care less about economic growth. The voters believed her apparently.

May should be replaced by the Conservative Party with a leader who cares about the economic plight of the average Brit and less about being politically correct. The "kindler, gentler" approach to conservative leadership, begun under Bush 1 in the US, leads to electoral catastrophe, as May found out this week.

You either believe in free markets or you don't. May doesn't. Good riddance.

Friday, June 9, 2017

Today's news, ignoring the plight of James Comey and Theresa May, includes the revised upward economic growth numbers in Europe. For the first time in a long time, Europe is experiencing 2+ percent growth. This is cause for celebration in Europe, whose economy has barely had a pulse for the past decade or so.

It takes 3-4 percent to do anything for folks at the bottom of the pile, so there is no reason for those folks to celebrate. But, the well-to-do and job-protected bureaucrats and academics can take heart. There will be, for a while, enough government largesse to keep them going. Pity those without the protections these folks have.

The overburdening regulations in Europe guarantee that folks at the bottom will never escape, similar to the game plan by the left in the US. This keeps a ready supply of voters who are mislead, ironically, by the constant drumbeat of income inequality. If folks at the bottom were given a decent chance to change, for the better, their economic prospects, the left would never win another election. Thus, the regulatory apparatus designed, in part, to keep the poor in place.

Meanwhile, the Trumpian efforts to get economic growth restarted in the US are sidetracked partly by Trump's foolish behavior and partly by the press, whose main interest these days seems to be an attempt to overthrow the Trump presidency.

Meanwhile, the folks at the bottom of the economic pile, both in Europe and in the US, are left to languish without much hope for a better life. So, Europe celebrates improved economics for the wealthy and the protected, while America focuses on a non-existent Russian threat.

Thursday, June 8, 2017

James Comey gave his notes on a meeting with the President of the United States to a buddy of his (a left wing professor at Columbia University) to be released clandestinely to the Washington Post. Wow! A great example of a deliberate effort to undermine the government of the United States by the former director of the FBI. He deserved firing. Comey is a disgrace to the country.

Wednesday, June 7, 2017

The Federal Reserve is embarrassing and Janet Yellen and her cohorts would produce more social good if they put off meeting again for a few years, rather than to continue the absurdities that have come to be known as Fed Policy.

The Fed now claims it is on a path to raise interest rates. Could of fooled me. Every interest rate of any relevance to the economy has come straight down during the Fed "rate raising" process. Maybe if they "raise rates" again they can get the ten year yield under two percent. Would the Fed consider that a successful exercise in "rate raising?" Mortgage rates have plummeted. Is that another example of a successful "rate raising" process?

You have to wonder if this is some loud joke being played on all of us.

We should close the Fed down and replace the Fed with a simple monetary rule, such as has been proposed by Stanford economist John Taylor, With the exception of the virtuous Fed Policy led by Paul Volcker from 1989 to 1987, the Fed has either created instability or unproductive distortions in the American economy.

Sunday, June 4, 2017

The European Union and China failed to reach any "climate pact" agreement as their meetings broke up in disarray yesterday. As reported in today's Wall Street Journal, the expected role of China, supplanting the US as the new "leader" of the climate change partisans never materialized. Why?

There is no patsy at the table willing to pay for all of this. Now, the emerging markets look to the EU and China to foot the bill for their climate change activity and guess what? The EU and China are unwilling to backfill the US commitment. Since they made no commitment of their own, that leaves no money for the infamous "Paris Accords."

Naturally, this story was not reported by the "fake news" sources known as the New York Times and the Washington Post. These "fake news" organizations only report stories favorable to their ongoing narrative that all the world is ready to make sacrifices for the climate change agenda except the US. In fact, it turns out, no one is willing to make such sacrifices, other than, of course, Obama and he is out of power.

The "Paris Accords" was nothing more than a wealth transfer from the US to the rest of the world, as President Trump noted in his speech withdrawing from the accords. Now, without a patsy to foot the bill, the entire charade is collapsing.

Where is the EU? Where is China? The same place that they have always been. Spewing forth rhetoric about why the US should fund everyone else, joined, of course, by the Obama-Clinton-Schumer-Pelosi-Warren chorus. America be damned, say these folks. Hooray for those who want our money, but are unwilling to make any sacrifices at all in the name of climate change.

Trump did the right thing. When will the NY Times and the Washington Post report the news truthfully and without bias? The answer .... never. Thankfully, there are other sources to get our news.

Saturday, June 3, 2017

The NY Times today lambasted President Trump in an editorial for walking away from the Paris Accords. At least, for once, the attack on the President wasn't a news story. Instead, this nonsense was found in an editorial where it belongs.

What is their argument?

"In truth, the agreement does not require any country to do anything," says the NY Times editorial.

That's their argument.

So, if the Paris Accords are meaningless, what possible difference can it make if Trump walks away from it? The rest of the editorial makes no sense.

If it is voluntary and therefore amounts to nothing, as the NY Times editorial argues, then why all the vitriol.

Is policy just a pose? Are the Paris Accords, just a statement of sentiment with no real teeth? That's what the NY Times is arguing.

As usual, it is all about a narrative and zero about policy. That is so typical of the NY Times.

The truth is that the Paris Accords inflict enormous damage upon the US economy without doing a single thing for the world's climate. That's the truth, whether the NY Times likes it or not.

Friday, June 2, 2017

Critics of Trump's actions on the Paris Accord argue that America will cede "clean energy" jobs to China and other countries. This argument is completely absurd. Who produces "clean energy" products has nothing at all to do with where the demand is. If that were the case, Switzerland would be a major gold producer and the US would import virtually no textiles or furniture.

The left stoops to arguments like this that make no economic sense in a deliberate effort to mislead the public. Free speech permits such nonsense, but common sense should limit the impact of nonsense arguments.

Where "clean energy" products can be produced most efficiently will determine who produces and who dominates the "clean energy" business, not where the demand is coming from. The most significant "clean energy" product of the past twenty years is natural gas. The US is far and away the leader in this "clean energy" product, despite the best efforts of Obama and his liberal pals to curb natural gas production in the US.

There is no longer any kind of reasonable political or economic debate or dialogue in the US, thanks to the closed-mindedness of the far-left-dominated news media. But, the truth, fortunately, will emerge in spite of biased organizations like the NY Times and the Washington Post.

As one might expect, the media lambasted Donald Trump for walking away from the Paris Accords. Virtually all of the articles attacking Trump have no facts in them at all and seem to completely misunderstand the accord as well as the substantive issues in the "climate change" debate. Ignorance, apparently, is bliss when it comes to reporting the news.

There is one article that stands out for its misleading commentary -- the WAPO article this morning by Glenn Kessler and Michele Lee.

Here is an example of their reasoning:

"Trump also suggested that the United States was treated unfairly under
the agreement. But each of the nations signing the agreement agreed to
help lower emissions, based on plans they submitted. So the U.S. target
was set by the Obama Administration."

The suggestion is, of course, that anything the Obama folks did would be fair to America. That misses the entire point of the last election. Virtually ever action taken by the Obama Administration from the Iran Deal to the Russian Reset to the Syria red line to the appeasement of North Korea to the Paris Accords was "unfair to America." Obama rarely, if ever, stood up for America, its values or its interests. That's one of the main reasons that Trump won the election.

WAPO is not a newspaper. It is an arm of the Bernie Sanders wing of the Democratic Party. Everything they write is written from that perspective without regard to facts or to history. WAPO would like to see a decline in American living standards and a retreat in America's role in the world. Fortunately, Trump was elected, destroying the WAPO dream.

Thursday, June 1, 2017

President Trump pulled the United States out of the Paris Accords. Had this been a legitimately ratified treaty, Trump would have been unable to do this. But, in fact, this was not a treaty, according to the Obama Administration, and therefore they never sought Senate approval, as is required under the US Constitution for the ratification of any treaty. This was just one more unilateral action by Obama, authorized by no one else and with zero consultation with the Congress. No wonder such an arrangement could be easily tossed aside.

Why wasn't the Paris Agreement sent to the Senate for approval? Three guesses. Such a one-sided agreement would never have gotten through the US Senate, even if Democrats were in charge.

Supporters of the agreement argue that global temperatures would drop by two-tenths of one degree by 2100. Whoop-te-do!

But it would beggar the United States and reduce our economy to a pitiful shell of itself.

As President Trump prepares to announce his decision on the Paris Climate Accords, it's worth pausing to think about what is at issue.

Without consulting with Congress or submitting the Accord to the Senate for ratification, Obama unilaterally signed this agreement with a "public be damned" attitude that all but ensured that the agreement would become a flash point for future political debate. There was no effort by Obama to gain consensus. Instead, this was just Obama, once again, unilaterally legislating an astounding set of new rules, taxes and other growth-defeating initiatives on a country already limping along economically after the hammer blows of Dodd-Frank and arbitrary EPA directives.

The arbitrariness, one might say lawlessness, of the Obama Administration was a key reason that Donald Trump became President. Right or wrong, to treat the public like the Paris Accords are none of their business hardens attitudes and guarantees future political turmoil. The Obama folks are now seeing much of their legacy overturned. This is to be expected since no consensus was ever sought by the arrogant band of elitists in the Obama White House.

What, in reality, would the Paris accords accomplish? Even to its defenders, the Paris accords would accomplish almost nothing useful for future temperature levels. And, at what cost? No other country would be required to live up to the agreement except the United States. Thus, other countries could vastly accelerate their production of carbon emissions, while the US economy sank into the quagmire, burdened with draconian restrictions on their energy usage. How is this in the best interests of the United States?

The "climate change" bandwagon is lead largely by folks who know absolutely nothing about science or about the environment. They are largely wealthy folks who, themselves, have a huge carbon footprint, but want others to live a dramatically lower standard of living to satisfy the desires of the wealthiest among us. Al Gore and Hillary Clinton come to mind. Will these folks ever make any sacrifice for the environment, or is it only working Americans that must pay the price for the latest left-wing pipe dream.

No one is really sure what "climate change" really means. But, the one thing we know for certain is that folks that push this cause want to silence any dissent or any disagreement with their position. "Climate change" is a religion pushed largely by ignorant left-wingers who have never taken the trouble to inquire about the basis for their views. Had they done so, they would question a so-called "scientific consensus," that is no consensus at all. Silencing legitimate debate is reminiscent of the Spanish Inquisition, which the "climate change" advocates appear to resemble in attitude and open-mindedness.

Trump should walk away from the Paris accords and, in the future, a treaty agreed to by US leaders should be submitted to the US Senate, as required by the US Constitution. Additionally, matters as important as the future of our environment should not be dogma. Science should be free of political bias and open to debate, not something with which the left appears to be comfortable.

Sunday, May 21, 2017

The pilloring that Donald Trump is getting from all sides is reminiscent of the nightmares that Harry Truman endured as President. Truman was so hated by the press and what media there was in the early 1950s that he chose not to even attend the Democratic National Convention of 1952 when he certainly would normally have been considered a candidate for re-election. Republicans and Democrats alike piled on as Truman achieved the lowest poll numbers in modern times. Why?

The press wanted Tom Dewey, the urbane Governor of New York. They thought he was going to win in 1948 and that Truman would be demolished. After all, Truman was a hick politician from Kansas City and didn't have the political polish of the smooth-talking Dewey. Fortunately for America, Truman won the election and proved to be one of the best Presidents in American history, though vilified by the press throughout his nearly eight years in the White House (he took over from Roosevelt in the first year of FDR's fourth term).

Truman was brave, intelligent and plain spoken. He did not look like he came out of central casting for the role of President. Ditto for Donald Trump. Who would have thought?

But Trump is the President. He has a bold agenda. He has appointed a truly outstanding cabinet -- perhaps the best cabinet in modern time. He may not be the guy you want to sip tea with in the afternoon, but he is headed politically in the right direction. He should be given the chance that Truman never got from a hateful and angry press corps.

Friday, May 19, 2017

Almost everything proposed by the left reduces incentives. Given enough of that stuff, the economy eventually collapses. The old Soviet Union, the old China and today's Venezuela are textbook cases of how destroying incentives destroys a country's economy. Today's Russia and today's China, having brought back a substantial amount of economic incentives, are, today, far, far better places for their average citizens.

This is a persistent, historical theme. It sounds great to provide free stuff. But, providing free stuff eliminates the incentives necessary for an economy to grow. In time, the economy, absent incentives begins to slip into collapse. Venezuela shows the path.

Venezuela was the dream of the left. The election of Hugo Chavez promised to provide free everything for everyone and to throw out the capitalists. That program succeeded and, today, the outcome is visible to see: riots in the streets, people starving, an economy crumbling. This is what happens when incentives are stripped from an economy.

It is possible for free elections to destroy a country: Venezuela is an example today; Turkey will be an example tomorrow. More important than free elections is a commitment to individual liberty and free markets -- check out Singapore if you need an example.

Singapore does not have free elections to determine the country's future, but Singapore does have free markets and individual liberty that most countries, including the US, do not have. Yes, Singapore is not perfect. But, where would you rather live -- Singapore or Venezuela (or Detroit or Chicago)?

Tuesday, May 16, 2017

The EU bailout of Greece has all but guaranteed a generation of misery for the Greek people. Greece is now entering its fifth recession in a decade, after announcing another two consecutive quarters of negative economic growth. This is the Merkel-Sarcozy bailout legacy.

Greece should have defaulted on their debt. No bailout was required. Bailouts prolong agony, curing nothing.

Note that Puerto Rico and Detroit defaulted. That proved therapeutic for Detroit and will do the same for Puerto Rico.

Get the politicians out of the way. A normal bankruptcy process is the key to future prosperity. That and free markets. Meddling politicians with bailout solutions produce economic stagnation.

Friday, May 12, 2017

Yesterday's PPI number -- 0.5 percent -- was mildly shocking to the markets. A six percent annualized inflation rate would change things considerably. No one, of course, is expecting PPI number to be anything other than an aberration. But, what if it isn't?

In one important way higher inflation could be therapeutic. Inflation lowers the "real" value of debt and, ultimately, inflation may be the only mechanism to reduce the absurd sovereign debt levels in the western economies. Inflation euthanizes sovereign debt in a way exactly equivalent to taxing the principal value of the debt. It just looks different and often goes unnoticed. The public won't agree to taxes to lower the value of debt, but they may well not notice that inflation is eating up the value of the debt.

The true economic problem with inflation arises to the extent that it is "unexpected." Future commitments make assumptions about future economic values, including the "expected" future inflation levels and interest rates. If these latter two variables prove to be widely different than earlier expectations, there could be real economic dislocation. Expected and constant inflation poses few problems since contracts can be adjusted to reflect such inflation, but unexpected inflation can be disastrous because it makes so many past decisions look foolish in retrospect. Resources get consumed in a wasteful manner, if expectations are too far off the mark.

Wednesday, May 10, 2017

Two factors combine to suggest that a boom may be underway in the single family home market: 1) the tax laws; 2) the massive excess reserves in the commercial banking system.

The tax laws still provide for deductible mortgage interest payments and essentially tax free capital gains on the vast majority of home sales. No other asset on the planet has that kind of special tax treatment.

Meanwhile, Bernanke's policy of buying over $ 4 trillion in fixed income assets has resulted in over $ 4 trillion of excess reserves in the banking system. This level of excess reserves would permit a huge expansion in residential mortgage lending without running into reserve or capital limitations. This is a fuse ready to be lit.

Since 2009, the home owner percentages have fallen, but that may be coming to an end. There are already signs of booming prices in many residential markets.

We learned nothing from the pre-2008 real estate boom. All of the tax bonanzas that led to the boom are still in the tax code and Fannie and Freddie are alive and well.

Tuesday, May 9, 2017

The newly elected French President, Emmanuel Macron, should begin immediately to unwind the European Union's bailout policy for profligate members. If that isn't done the European Union has no hope of survival. The EU may have little or no hope anyway, since EU member country debt levels have exploded beyond sustainable levels.

The Greek bailouts are symbolic of an arrogance and a lack of understanding of simple economics that permeates officialdom in the EU. As long as the EU provides a bailout apparatus, two conclusions follow automatically: 1) There is no incentive for member states to behave in a fiscally sensible manner, since bad behavior is rewarded by a bailout mechanism; 2) Sovereign debt levels will continue to increase with no limits until ultimate disaster occurs.

It is unlikely that Macron will bring sanity to the EU, but hope springs eternal.

Saturday, May 6, 2017

In today's NY Times, there is an article in the business section written by Reed Abelson and Katie Thomas that seems to have no other purpose than to deliberately mislead readers. The headline: "In Rare Unity, Hospitals, Doctors and Insurers Criticize Health Bill."

That headline would suggest that doctors, as a group, oppose the health care bill that passed the House last week. As everyone not living in a cave knows, doctors overwhelmingly oppose Obamacare and support the House bill passed last week.

In an incredible exercise of fake news, the Times' article provides no support at all for the statement that "doctors," acting "in rare unity" are criticizing the health bill. That statement is nothing more than a deliberate lie. Isn't that the definition of "fake news" -- a deliberate lie.

Worse, all this article does is quote two or three insurance industry lobbyists, who see some things they don't like about the House bill. Jeez, is there anyone on the planet who thinks the House bill is perfect. I don't think a bunch of lobbyists for the insurance industry speak for doctors "in rare unity."

Once again, simply to buttress their own political viewpoint, the Times has deliberately set out to mislead its readers by presenting false and misleading headlines accompanied by an article that has nothing to do with the headline. That's fake news.

Sunday, April 30, 2017

It's worth acknowledging that the news media is succeeding in its effort to abandon the normal news media role of providing information to the public. Anyone who wants to know facts is wasting their time watching CNN or MSNBC or reading the New York Times. These folks are no longer providing their readers with true information and actual facts.

Instead, these media giants are primarily involved in a daily hatchet job, attacking their political enemies and praising their political friends. It is all about politics and little else. Blatantly false and misleading stories, told only from one, usually very extreme, political viewpoint are ubiquitous in these media outlets.

The nonsense news in these media forums extends to economics, politics, even sports. No subject is immune to the political bias of CNN, MSNBC, and the NY Times. Reporting about economics is so misleading and false in these media outlets that it would be difficult for someone using only these sources to have any idea about the true situation about the American economy or economies beyond our shores.

The problem with these media outlets is not simply that all stories are told from a single, extreme, point of view with often fabricated "facts." That is only part of the problem. The hatred for objective, balanced, news is palpable in the daily reporting. Note that these media outlets have largely ignored the "freedom of speech" issues that have engulfed university campuses. The media, like the modern university, abhors any diversity of thought or opinion. and will use every weapon at its disposal to crush free speech and free inquiry.

Admittedly, Fox News has its obvious slant. But Fox News gives the opposing views air time and seems a paragon of objectivity compared to CNN, MSNBC, and the NY Times. One can at least watch Fox News and come away knowing the essential facts about the American and world economy and about daily political activity of the country. That's not possible with CNN, MSNBC, and the NY Times.

Monday, April 24, 2017

"Fed Raises Rates" says the headlines in the mainstream press. Nothing could be more nonsensical. All the rates that matter -- mortgage rates, the yield on the ten year treasury, and others -- are at their lows and have moved dramatically lower since "the Fed raised rates."

So how does the financial press explain itself. The answer is that they don't bother. Articles about the Fed are typically strongly worded expressions about the future of the macro economy that bear no resemblance to what later transpires.

Not to say that rates might not rise at some point in time, but that will have nothing to do with anything going on at the Fed.

The Fed should be replaced with a simple monetary rule. It hardly matters which rule. Nothing could be worse than the record of Federal Reserve policies since Paul Volcker stepped down as Fed Chairman in 1987.

Macroeconomics has become more "witchcraft" mixed in with political opinions. See Krugman, Yellen and Stiglitz for a flavor of the current state of macroeconomics. It is utter nonsense with zero relevance to any economy in the modern world.

Saturday, April 22, 2017

The European Union was a good idea. In theory, having a common currency, open borders, and free movement of goods and people brought Europe the advantages that the US has always enjoyed. But bureaucracy, hubris and incredible stupidity will, in time, bring the Europe Union experiment to an ignominious ending. Well deserved.

The arrogance of the leaders of the European Union are hastening the end of the European Union. There was never a need to bail out Greece or Ireland and there is no need to bail out Italy, Spain, etc. These countries should be permitted to declare bankruptcy (as Detroit did in the US).

The absurd bailout programs put the savings of hard-working Europeans in jeopardy to bail out countries like Greece, notorious for squandering public and private wealth. That policy had no chance of working and inevitably posed the question as to what value there was in EU membership.

To make matters worse, Merkel and Sarcozy and the Brussel bureaucrats initiated the refugee policy that has de-stabilized almost every European country and has created domestic economic and political problems for all the of the larger members of the EU. There was no reason to adopt this absurd policy and the EU will not survive it. As it shouldn't.

As in the Obama nightmare in the US, the Merkel-Sarcozy nightmare in Europe placed bureaucrats in control and average citizens were left to bear the brunt of arrogant, unfeeling, absurd policies. The Obama bureaucrats and the EU bureaucrats live in leafy neighborhoods and are funded by average taxpayers who have to contend with atrocious policies that they have been foisted upon their countries.

So, a good idea became a political and economic disaster. A replay of the Obama nightmare that the US is only just beginning to escape from. Europe will make its escape as well. Watch what happens in the French elections on Sunday. The French want their country back.

Friday, April 14, 2017

It used to be: when pundits announced that the "Fed raises rates," that interest rates actually went up. No longer.

Mortgage rates and ten year treasury yields have collapsed since the recent "Fed raises rates" announcement.

The Fed has arbitrarily used its unlimited purse strings to raise the one-day repo and funds rate, but no other rates followed. Interest rates are lower today -- much lower -- on things that matter -- mortgages, ten year treasuries, high yield debt, commercial loans, whatever -- than they were before December, 2015 when the Fed began "raising rates."

Once again, economists use of terms like "raising rates" doesn't really mean raising rates for any interest rate that might be relevant to the economy. Economists have a narrative. If the facts don't fit the narrative, economists invent new (false) facts.

Interest rates are down, not up. The Fed has done nothing of consequence through their recent "interest rate increases."

The economics profession is increasingly a cacophony of bizarre, frequently illogical, slogans.

One of the more absurd of these slogans is the concept of "rent-sharing" by an ongoing business. The idea, broadly, is that company profits are actually rents in the sense that they are unearned and unresponsive generally to market forces. This absurd notion was the outgrowth of "research" that purported to show that workers of similar talent receive widely different compensation depending upon the profitability of the businesses they work for.

The idea that similarly skilled workers make disparate compensation is, at best if true, a static, temporary, phenomenon. But, more likely, this "research" outcome is simply another example of far-left academics in search of a nonsense "fact" that supports an ideology. In this case, the ideology, by further stretches, extends to the minimum wage discussion.

Minimum wage laws say, among other things, that if a company wishes to pay an employee in skill training, as opposed to cash, it is breaking the law (and so is the employee, who wishes to gain skill training). As everyone, not drinking the "progressive" kool-aide knows, low income folks do not have access to colleges and universities where all the "progressives" hang out. Rich and upper middle class Americans (which constitute the demographic of the American "progressive") luxuriate in leafy colleges and universities and cruise their way into the employment world.

But, the poor don't have the luxuries that are provided to high income "progressive" college students and their mentors. The poor often don't even have high school diplomas. If they are going to learn a skill, it will have to be through on-the-job training -- an opportunity that "progressives" have fought to prohibit by law.

Using the bizarre notion of "rent-sharing," the modern "progressive" academic economist argues that divvying up profits between labor and capital is largely unrelated to market forces. Thus, within wide limits, firms should pay much higher wages (in cash only, not skill training) to their lowest skilled employees. It must be nice to sit in a plush office, making six figure salaries, with six months off every year and opine about what rights poor people should or should not have.

Why not let poor people decide for themselves? Why, instead of cash payments, can't poor people have the same rights as these wealthy, "progressive" economists? Why can't they work for peanuts while gaining job skills that will transform their economic status. Why are "progressives" opposed to that?

"Progressive" economists increasingly substitute logic and sound research for a search for conclusions that fit their "progressive" narrative. The "progressive" insistence on outlawing the right of contract to poor people through their insistence on minimum wage laws only serves to perpetuate inequality and limit opportunities for the poorest among us. Meanwhile, the "progressives" sit back in luxury and feel good about themselves as they trample the hopes and dreams of the poor with absurd slogans and bizarre "research."

Saturday, April 1, 2017

From the Fall of 2008 until November 8, 2016, the Federal Reserve was content to build up a $ 4.5 trilllion balance sheet and leave short term rates below one percent.

What is different now?

According to today's Wall Street Journal, the Federal Reserve is now, for the first time since 2008, contemplating reducing the Federal Reserve balance sheet. Not only that, the Fed has raised the repo and funds rate this year already and promises to repeat the exercise twice more this year. Why?

What makes 2017 the appropriate year? What facts are different that leads the Fed to want to raise rates and reduce borrowing capacity in the economy (reducing the Fed balance sheet will, of necessity, reduce the level of excess reserves in the commercial banking system)?

Guess who Janet Yellen voted for? That's right -- Hillary Clinton.

Does anyone really believe in Fed independence? What a joke.

The (political) Fed should be abolished and monetary policy should be replaced by a fixed rule.

The Fed is just one more political animal threatening the economic and political health of the country. Get rid of it.

Wednesday, March 29, 2017

The article in today's NY Times by Edward Wong takes first prize in the contest run daily in the NY Times to see which article contains the most fake news.

Here's the headline: "China Poised to Take Lead on Climate After Trump's Move to Undo Policies."

Now you would think that the headline would be followed by a story that shows China actually doing something regarding Climate Change. You would be wrong.

What the article does is quote various Chinese political hacks and leaders saying that they are committed to the Paris Climate Accords. Of course they are. The Paris Accords impose absolutely no restrictions on the Chinese regarding carbon emissions or anything else related to Climate Change. Naturally, the Chinese will stay committed to an agreement that imposes no restrictions whatsoever on their behavior.

The Chinese are the biggest polluters on the planet and have no intention of reversing that behavior. Maybe, Mr. Wong should take a trip to Beijing to understand what real pollution is all about (or numerous other Chinese cities as well). Large numbers of average Chinese citizens in China's largest cities daily wear gas masks because of the unbelievably high levels of air pollution. Those are the facts (left out of Mr. Wong's absurd article).

So,. where are the facts in the article. There are none. Typical NY Times fake news.

Tuesday, March 21, 2017

The only crime, admitted by all in yesterday's hearings, was the criminal leaking of information by present and former US government officials in the Michael Flynn case. The other matters were all innuendo and slander including the charges of collusion between the Trump Administration and Russian operatives and the President's assertion that he had been wiretapped by the prior administration. There was zero evidence of the commission of a crime in these latter cases, but the revelation of the outing of Michael Flynn's private communications was unquestionably criminal, as Comey admitted repeatedly.

Comey refused to acknowledge that the FBI was investigating the admittedly criminal activity by US government officials, past and present, that lead to Flynn's ouster. If Comey is not investigating this, then section 702 that gives the CIA and the FBI authority to monitor foreign conversations should not be renewed by Congress, because, otherwise, no American conversation with a foreign person or entity can be considered private.

All of this nonsense has served to deflect America's attention away from its real enemies -- Iran and North Korea and toward a country that in no way threatens the US -- Russia. Russia is a real threat to Europe, but zero threat to the US. Europe, who spends little or nothing to defend itself, expects the US to stand up and counter the Russians. Nonsense. It is past time that Europe expected the US to shoulder the burdens of Europe. Let Europe defend itself.

Russia - Trump collusion is complete nonsense and an effort by the Democratic Party to confuse the public and promote the interests of Iran, which Obama and the Democrats have done much to promote.

Saturday, March 18, 2017

The articles that are appearing almost daily about central banking are incredibly inept and reflect poorly on the financial news media. The central fact that is missing from every single one of these articles is that the commercial banking system, both in the US and in Europe, is awash in excess cash reserves and could easily provide incredible amounts of additional commercial lending, if the demand was there and the regulatory authorities would relax.

Instead the articles are all about how easy money is going away. Really? Prior to the current regime, easy money was always and forever defined as a condition of massive excess cash reserves in the commercial banking system. That condition is not going away -- not in the US and not in Europe.

Increasing the one day interest rate in the banking system is a stupid policy and has, so for had no effect for good or evil, as elementary logic would suggest. That doesn't keep Draghi and Yellen from spouting nonsense.

What keeps commercial lending down is deliberate government policy. US policy, encased in cement in Dodd-Frank, is that banks are now agents of the US government and are no longer intended to play their traditional role as financial intermediaries. The result of that absurd policy is the the moribund economic performance of the past eight years.

It's time the financial press got some new voices, who get beneath the PR utterances of political hacks like Draghi and Yellen, and tell the public the facts about monetary policy, instead of these air-brushed ignorant (of the facts) stories that are incredibly misleading.

Monetary policy remains absurdly loose and that fact will not change until excess reserves are drained from the system, both in the US and in Europe. But, easy money won't matter as long as bureaucrats are hell-bent on prohibiting economic growth and the expansion of commercial bank lending.

Thursday, March 16, 2017

Once again, the media missed the story. The headlines say: "Fed Raises Rates." What exactly did the Fed do, since ten year yields and mortgage rates are lower today than yesterday? They certainly didn't raise those rates. And, by the way, those rates matter.

Instead, the Fed now pays one percent on all commercial bank reserves parked at the Fed. That arbitrarily forces the Federal Funds rate to one percent, since it is illogical for a commercial bank to loan reserves out to another bank at a lower rate than what the Fed is offering. Whoop-te-do.

Of course, that isn't all the Fed did on Wednesday. The Fed agreed to do (a limited amount of) repos at a minimum of 75 basis points. Whether this works or not is anybody's guess since it is hard to imagine the Fed taking on 10 trillion in repos just to avoid looking stupid.

In any event, neither of these actions have implications for the broader rate spectrum. One-day rates have been going up since December, 2015, but nothing else seems to be going with them.

Where is this story in the financial press?

The Fed announced that they do not intend to reduce their $ 4.6 trillion balance sheet, which ballooned over the Bernanke-Yellen years, from under one trillion to the current ridiculous levels. And, why? What economic theory suggests that anything virtuous is going to occur by the Fed arbitrarily expanding their balance sheet?

This whole business is ridiculous, has no support in economic theory and no empirical support. This is equivalent to witchcraft. Except that witchcraft is acknowledged to be absurd. This isn't. Yet.

The best analogy is to suppose you intended to raise the price of all fruits and vegetables and your policy was to bid $ 3 for every apple brought to you (assuming that apples were a dollar apiece, when you began the policy). Okay, if you bought enough apples (heaven knows what you are going to do with them), you could force the price of apples to $ 3. But, is there some predictable effect on the price of carrots or oranges or grapefruits. Not likely.

The Fed should be abolished and replaced by a simple monetary rule and stop all the costly shenanigans.

Wednesday, March 15, 2017

You often hear people argue that health care is a right. Is that true? If so, why?

Imagine two different people: one lives a healthy life style, saves their money, purchases health insurance; the other smokes and drinks, becomes heavily overweight, saves nothing and has no health insurance. If health care is a right, then the first person is legally required to use their savings to provide health care for the second person. How fair is that? People make choices. Should they be insulated from the results of those choices?

You might argue: how can people who have made bad choices be taken care of? Historically, the answer has been charity. Charity hospitals once were ubiquitous in America. But they disappeared when medicare and medicaid took over. Charity hospitals provided excellent care because they were usually the breeding ground for future doctors, who did internships in the charity hospitals.

Imagine this idea: if someone deliberately contracts a terminal disease -- deliberately -- that costs billions of dollars to cure one person. Should society foot that bill? Why?

By forcing those who play by the rules to pay for those who don't play by the rules, inevitably, you will end up with many more people not playing by the rules.

It is different, if through no fault of their own, someone has a debilitating disease without the funds to get treatment. Then, it seems that, within limits, society has an obligation to help those who are ill through no fault of their own. But, this is a very, very tiny group of people and would cost very little in the aggregate to provide for this group.

Our health care system is burdened down with people who consciously made decisions that they knew would result, later, in serious illnesses. I don't see the case for forcing taxpayers, who consciously made good decisions to fund those who deliberately and knowingly made bad decisions. I can see the argument for private charity in these cases, but not public charity.

Those who disagree with this have a simple solution. Give your own money to help fund folks who made bad decisions, but don't require lower middle income families, playing by the rules, struggling to support their families, to bankroll bad behavior. That's what medicare and medicaid does.

Sunday, March 12, 2017

The main criticism of the Ryan Bill on "Repeal and Replace," coming from the Freedom Caucus, has to do with the tax credits that are designed to help lower and middle income Americans afford insurance. These credits replace the direct subsidies that were in Obamacare.

The Freedom Caucus argues that health insurance and health care costs will not decline if the Ryan Bill passes, because of the tax credits.

While it is true that the tax credits create more demand, than would otherwise be the case, there are other parts of Obamacare and of the American health care system that are probably far, far more important in determining insurance costs and health care costs. And, at the very least, the tax credits can be defended as suppportive of lower and middle income Americans and serving to even the playing field with current tax-favored employer plans. It is not a transfer to favored classes of people, which is a characteristic of a lot of existing health care as well as of Obamacare

Where to begin?

Obamacare requires all eligible health insurance sold to have certain coverages that apply to some buyers but not others. If buyers were free to choose the health insurance they would never, ever choose insurance that cover illnesses that they cannot possibly acquire. Almost every single Obamacare insurance plan does not fit the buyer. Thus folks are paying for something that they don't need.

Obamacare implicitly forbids the sale of health insurance across state lines. What conceivable reason could exist for this cost-increasing requirement.

Obamacare refused (in the Congressional admendment process) to consider limitations on frivolous lawsuits that drive up health care costs in two very important ways: 1) requires gargantuan medical mal-practice insurance premiums for doctors who, innocently, make mistakes (is there some busines that doesn't make innocent mistakes); 2) effectively forces doctors to peform unneccesary procedures, require unnecessary tests and, often, perform unnecessary surgeries -- for no other reason than to limit medical mal-practice lawsuits. A huge amount amount of these unnecessary items have no medical justification at all. They are a sop to the trial lawyer industry.

Obamacare extended Medicaid to 10 million recipients in the most inefficient possible manner. Ignoring the plain fact that currently one-third (and growing) of all physicians refuse medicaid patients, letting states designed the best system for their state -- which is in the Ryan bill -- can make medicaid dramatically better for recipients, as well as keep costs under control.

There are many other things about the current state of US health care and of Obamacare that will disappear eventually from HEW changes brought about by Secretary Price and further legislation that is already making its way through the House of Representatives.

The Freedom Caucus should swallow hard and accept the tax credits in the Ryan Bill and move on. They will never win this issue politically, but they could win all of the other issues outline in this post.

Friday, March 10, 2017

With the shackles of heavy-handed government regulations being loosened, the US economy is beginning to exhibit a new spark. The jobs number today of 235,000 jobs for the month, while modest, is definitely an improvement over the Obama jobs numbers. Hopefully, more progress lies ahead as the albatross of big government is sloughed off and capitalism is permitted to do its thing.

The critics of the current administration seem viscerally opposed to economic growth. They are content with the status quo. This is completely understandable. Critics in the bureaucracy and the academy and the Soros-Buffett types gain nothing from economic growth. Their prosperity is based mainly upon hegemony over the masses. They like the no-growth economy and they work hard to make certain that sufficient impediments are placed along the roadside to keep the economy stagnant and to maintain their own positions of control.

The average American is not protected by inherited wealth (yes, Soros and Buffett are both beneficiaries of inherited wealth) and not protected by tenure rules in the academy and in the bureaucracy. The average American does benefit from economic growth. Free markets mainly benefit the poor and lower middle income. They don't do much for wealthy folks. Check out Latin America -- wealthy folks and bureaucrats do great! -- average folks are mostly in poverty. That's the world that heavy handed bureaucracy gives you. The Venezuela path -- the leaders and the powerful prosper -- the poor pay the price.

So three cheers for the return of freer markets and economic prosperity -- long overdue. But, don't expect the protected classes to join in the cheering.

Monday, March 6, 2017

Steve Ross is perhaps the greatest economist of the past 50 years not to have won a Nobel Prize. Ross passed away at his home in Connecticut yesterday of a heart attack. Just a year ago, Ross delivered a lecture in my class on Behavioral Finance at the University of Virginia (defending the Efficient Market Hypothesis, I might add). Later that evening, Steve had dinner with six of our top undergraduates. Ross was a genius, but he was also humble, affable and articulate in the extreme.

Monday, February 27, 2017

Giving the Oscar award to the wrong aspirant was a fitting tribute to a collection of wealthy, pampered, out of touch, multi-millionaire Hollywood types bent on an evening devoted to attacks on freedom and liberty and extolling the virtues of Iran and other totalitarian, thuggish, regimes. The evening celebrated an Iranian statement condemning the US, while decrying any effort to celebrate anything American. As is typical of Hollywood, freedom and individual liberty are so passe. What is in is: forced compliance with the mores of Hollywood -- mainly drug use, infidelity, anti-semitism, intolerance of others and an obvious hatred of anything American.

In Iran, most of the movies celebrated last night at the Oscars would not pass the Iranian censors. Maybe these wealthy, jet-setting, limousine-loving, Hollywood-types should move to Iran and see what life is like when freedom is quashed and the kind of nonsense rhetoric that Hollywood-types love is the law of the land.

Sunday, February 26, 2017

I read the Washington Post and the NY Times every morning. These two newspapers have been among the press targets of the Trump Administration in recent weeks. Is Trump being unfair, or, as some leftist pundits suggest, un-American?

How probable is it that every single thing that the Trump Administration or the Trump family does is wrong, done with bad intentions, and exhibit incompetence? Every single thing?

Well, if you read the Post and/or the Times that's what you get. On no occasion has the Trump Administration or the Trump family done anything competent, fair, or in the interest of the American people, if you believe the Post and the Times. Does anyone really believe that? Is that the outcome you would expect of a fair-minded press?

The Post and the Times have become the embodiment of a daily far-left political tract. The goal of both newspapers is to demonize the Trump Administration and the Trump family. There is no effort to be truthful. Stories are often simply made up out of no facts and then followed up as if, once invented out of whole cloth, they sport a life of their own.

The "Russian" story is perhaps the best example. There has never been a scintilla of evidence that anyone in the Trump camp has any relationship of substance with Russia, other than normal and legitimate business interests. Yet, the Post and the Times have created Russia as the newly found American enemy.

Those same rags view Iran and other major sponsors of terrorism as our friends.

Russia, in no way, threatens America. Were it not for Obama's incompetence, Russia would not now threaten the middle East or eastern Europe. Russia is a paper tiger with nowhere near the strength of modern-day Iran and nowhere near the threat to America that is represented by Obama-Post-Times' friend, Iran..

The Post and Times are political rags. They are not newspaper in the traditional sense of that term. They make no effort to present news, but instead are primarily focused on advancing the political agenda of the far left.

Trump is right. The mainstream media is an untruthful and unfair. The Post and Times are untruthful and unfair and do not provide their readers with news. Instead they simply present political diatribes, mostly untruthful, on a daily basis.

Saturday, February 25, 2017

Today's NY Times has an article written by Harvard Professor Sendhil Mullainathan lamenting the fact the Council of Economic Advisors is no longer represented in the cabinet. The Trump Administration has booted the CEA down a notch. This disturbs Mullainathan because he thinks the economics profession needs to be represented at the cabinet level.

It is easy to see why "academic economics" is accorded so little respect in the world of practical people these days, leading to this cabinet rebuff.

Every small child can tell you that if a price goes up, you will buy less of the product. No surprise here. But, what do academic economists have to say when asked if minimum wage increases lead to employers hiring less labor? At least half of these academics say that increasing the minimum wage either has no effect on hiring or actually increases hiring!

Is it any wonder that this type of nonsense loses credibility in the real world. But, that is the state of modern "academic economics." It is mostly political and mostly nonsense.

President Trump did the right thing in excluding these absurdities from the cabinet.

Friday, February 24, 2017

The US economy posted the lowest initial jobless claims number since 1973. This doesn't mean that much, since there are no specific Trump policy enactments that could have done anything yet. But, the atmosphere has definitely changed since Trump was elected and a new spirit of business optimism may have been a factor. No one really knows.

The big debate will be whether economic growth can be increased above and beyond the 3 percent level. Many, mostly Keynesian, economists don't think so. But, other economists disagree. Do free markets matter? That really is the penultimate issue.

The attitude since the inauguration of the first George Bush has been that free markets really don't matter and government intrusion is irrelevant to the performance of the economy. That view is about to be put to the test.

Forecasts of economic disaster and stock market collapses that were routinely made prior to the Brexit vote and prior to Trump's election proved to be among the worst forecasts in history. Those who thought that the government was the route to prosperity predicted that free markets would torpedo economic growth. Folks with that view do not have history on their side.

The state of academic macroeconomics is so pitiful that is unlikely that economists have much to say about economic performance any longer. Witness Bernancke's soothing statements in 2008 just prior to the collapse of the economy. Yellen's forecasts have been no better. Economists can't seem to be able to out-do a straight-edge in predicting the future of the economy. That doesn't keep them from trying. Mostly they simply put forward their political views based upon not much economic science.

But, the economy is beginning to feel pretty good. Potential repeal of Obamacare, rollback of excessive regulation of the financial sector and the energy industry, lower and simplified taxes all point to a potential rebirth of the historically powerful American economic engine.

Sunday, February 19, 2017

There is a new energy in the American economy. It hasn't shown up in the statistical data, yet, but it can be felt by those in the private sector. The bureaucratic left, of course, can't sense it. But, the average American worker and/or businessman can feel a new, fresh breeze in the air.

The negativity of the news media and the political antics of the anti-Trump factions (both within the Democratic Party and within a small, disgruntled section of the Republican Party) cannot overshadow the strengthening of economic activity that seems to be taking place.

The current administration constantly praises business success and has brought into key positions folks that have been successful in the business world. These things are game changers.

No doubt, those who hide in the bureaucracy or carp from their protected havens in academia are terrified by the idea that free speech and economic freedom now have supporters at the highest level of government. The Obama holdovers in government will continue to leak top secret information to their pals in the news media, but, in time, even they will be neutered by the strong winds of freedom that are sweeping the country.

Hatred, ad-hominem attacks and the silencing of free expression have been the hallmark of those controlling the bureaucracy and the academic community for nearly a generation. These folks are now starting to lose their hold. They are fighting back with personal attacks, violence, whatever it takes. They feel that only they have the right to speak and hold opinions. Their contempt for average Americans is everywhere on display.

But, there is change on the way. Free expression and free markets have their defenders and they now have the upper hand at the White House. No wonder the opposition is going ballistic.